PBS_R2_Caribbean_O&M_Consolidation_Analysis_Determination-12-7-2016_Redacted.pdf

Consolidation Determination for the

Caribbean Field Office

Consolidated Building Operations and Maintenance

Dated: November 15, 2016

Prepared by:

PBS, Region 2 - Caribbean Field Office

GSA PBS R2 Caribbean Field Office Consolidated Building Operations and Maintenance Consolidation Determination

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Table of Contents

EXECUTIVE SUMMARY

ACQUISITION HISTORY

Products/Services

Customers

Existing Contracts

New Requirements

MARKET RESEARCH OVERVIEW

ALTERNATIVES INVOLVING A LESSER DEGREE OF CONSOLIDATION

CONTRACTING APPROACH SELECTED

NEGATIVE IMPACT TO SMALL BUSINESS

STEPS TAKEN TO INCLUDE SMALL BUSINESS

SUBSTANTIAL BENEFITS EXPECTED

APPROVALS

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EXECUTIVE SUMMARY

The General Services Administration (GSA), Public Buildings Service (PBS), Northeast & Caribbean Region (i.e. R2), analyzed the benefits of consolidating four (4) existing small business 8(a) (i.e. 8(a) Business Development (DB) Program) set-aside contracts into one (1) singular small business 8(a) set-aside contract for Building Operations and Maintenance (O&M) within the Caribbean Field Office. Consolidation of the four (4) separate existing Building O&M contracts is necessary and justified as it will result in substantial benefits and an estimated savings of 30%). The substantial benefits exceed the statutory requirement (per 15 USC § 657q) of 10% of the estimated contract value for contracts below $94M). In addition to the significant cost savings, the contracts will be easier to manage, will eliminate waste; and will provide more efficient timing in Procurement Acquisition Lead Times (PALT) and contract administration.

The Agency will also benefit from a single vendor possessing a strong knowledge of several building systems. This will allow the Agency to receive enhanced maintenance and overall support. Finally, through a total small business 8(a) set-aside, this consolidation provides significant small business opportunity. This contract will be issued as a competitive 8(a) acquisition.

Table 1. Executive Summary

Project Title: Caribbean Field Office Consolidated Building O&M.

Contracting Office: GSA, PBS, R2 Caribbean Field Office (2PQAC).

Total Estimated Contract Value: At or Below $94 million.

Contract Requirements Supplies or Services.

Period of Performance:

One (1) year base period and four (4), one (1) year option periods (i.e. to be exercised at the discretion of the Government) for a Period of Performance (PoP) of five (5) years.

Deviations Applicable? No.

Business Case Applicable? No.

Program Initiative? N/A.

Intended Contract Structure:

- Indefinite Delivery Vehicle (IDV);

- Single-award;

- Fixed-price; and

- 8(a) Small business set-aside - Competed

Previous Contract Structure: Separate single-award Indefinite Delivery / Indefinite Quality (ID/IQ) contracts for each building.

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Substantial Benefits Expected: 30%.

ACQUISITION HISTORY

Products/Services GSA, PBS, R2 has a need for Building O&M services for the four (4) Caribbean Field Office locations below:

1. Federico Degetau Federal Office Building (FOB) and Courthouse; to include the Rainforest Kids Childcare Center and Parking Garage, Hato Rey, PR;

2. Jose V Toledo FOB and Courthouse, Old San Juan, PR;

3. Ron De Lugo FOB and Courthouse, St Thomas, USVI; and

4. Almeric L. Christian FOB and Courthouse, St Croix, USVI.

The Building O&M services include, but are not limited to, mechanical O&M, elevator maintenance and facilities engineering.

The applicable North American Industry Classification System (NAICS) Code is 561210 – Facilities Support Services. The small business size standard for NAICS Code 561210 is $38.5M.

Customers Services will be provided to GSA employees within the Caribbean Field Office, as well as other Federal building tenants.

Existing Contracts Table 2 entitled, “Existing Contracts” encompasses the existing contracts that supply Building O&M support for the four (4) Caribbean Field Office locations:

Table 2: Existing Contracts

Contract Number Contract Type Vendor

Vendor Size /

Designation

Obligated Contract Value

To Date *

GS-02P-03-PIC-0026

Competitive

8(a) Program

Brooks Range Contract Services, Inc. Small / 8(a) $11,598,862.52

GS-02P-11-PI-D-0004 IDV Building Mechanical Services Corp Small / 8(a) $3,486,671.28

GS-02P-11-PI-D-0024 IDV KCORP Technology Services, Inc. Small / 8(a) $3,127,384.27

GS-02P-08-PID-0002 IDV KCORP Technology Small / 8(a) $4,028,946.81

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Services, Inc.

Total $22,241,864.88

* (i.e. through 31 October 2017)

New Requirements The following services are currently being provided under existing contract vehicles and will be added to the solicitation for the consolidated O&M contract:

1) Elevator, lamp, photovoltaic panels and water pump maintenance services and fire extinguishers inspection at the Parking Garage Building on the Federico Degetau FOB Complex;

2) Maintenance of mechanical equipment at the Rain Forest Kids Childcare Center Annex at the Federico Degetau FOB complex; and

3) Elevator maintenance services at the Almeric L. Christian FOB.

The estimated percentage of the added work is 1.96% of the total current yearly cost of all buildings.

MARKET RESEARCH OVERVIEW

The acquisition team conducted Market Research (MR) activities over the last several months to better understand the potential (1) impact(s) of consolidating services (i.e. for the four (4) buildings outlined above); and (2) alternatives to the procurement approach. The acquisition team used various MR methods which are generally accepted and/or mandatory under the Federal Acquisition Regulations (FAR). The process included:

1. Analysis of existing similar contracts;

2. Posting a Sources Sought Notice by the R2’s Caribbean Acquisition Branch and reviewing received capability statements from interested vendors;

3. Participating in Match Making Events, held at the local Small Business Administration (SBA) Offices, to identify potential sources under their small businesses 8(a) BD Program portfolio.

Each element of the MR enabled the acquisition team to gain a better understanding of the industry and the role that small business vendors play.

The MR consisted of defining the scope by the range of related Maintenance, Repair and Operations (MRO). The project was labeled as “Facilities Management” in order to include the many duties associated with O&M as well as Elevator Maintenance. The procurement involves a number of activities including, but not limited to, the MRO of HVAC; electrical, mechanical and plumbing; fire protection and life safety; vertical transportation; engineering; Repairs and Alterations (R&A) projects; project reviews; management support; administrative services; and re-commissioning architectural and structural systems and controls. The NAICS Code of

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561210 (i.e. FSS) encompasses the range of these services; therefore, will be used to allow for broad vendor participation.

Market Analysis The acquisition team looked at other Region’s consolidated procurements (i.e. for similar scope contracts) since this is the first consolidated procurement for “Building O&M” (i.e. within R2) to be competed among Small Business concerns. The acquisition team found several procurements in various Regions throughout the country provided similar services to multiple buildings through one (1) small business set-aside contract. A sampling of similar contracts is contained within Table 3 entitled, “Similar Contracts”:

Table 3: Similar Contracts

Contract Award Year

No. of Buildings

Location Total Contract

Value

GS-03P-12-CD-D-0027 2013 12 Richmond, VA $14,000,000

GS-01P-14-BW-D-0020 2014 9 Multiple, VT $3,800,000

GS-05P-14-SV-D-0034 2014 3 Grand Rapids, MI $1,600,000

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ALTERNATIVES INVOLVING A LESSER DEGREE OF

CONSOLIDATION

The acquisition team examined several acquisition and contracting alternatives consisting of:

Alternative 1: Maintain Status Quo In this approach, one (1) new contract would be awarded and administered, separately, for each of the four (4) location; thus, maintaining status quo. The four (4) new contracts would be awarded under the Small Business 8(a) BD Program utilizing the set-aside procedures In Accordance With (IAW) FAR Subpart 19.8. This approach would result in higher operating and administrative costs from vendors; and administrative burdens for the Government;

Alternative 2: Task Order (TO) against a GSA Multiple Award Schedule (MAS) In this approach a single TO would be issued against a GSA MAS (i.e. 03FAC). This GSA MAC does not allow for Other Direct Costs (ODC) or open-market items (e.g. engineering services, administrative support, project management support services, firing range lead cleaning/abatement, asbestos testing/project design services and re-commissioning).

Furthermore, this alternative approach would require SBA’s release of these procured services from the 8(a) BD Program;

Alternative 3: TO against a Nationwide Building Maintenance and Operations (BMO) In this approach a single TO would be issued against the Nationwide BMO contract vehicle.

The Nationwide BMO is a Federal Strategic Sourcing Initiative (FSSI) solution. The BMO FSSI vehicle does not include the Caribbean location in its Scope of Work (SOW); and

Alternative 4: Unrestricted Open-Market Solicitation In this alternative, a single-award ID/IQ contract would be awarded based on an unrestricted open-market solicitation. This approach may result in a greater amount of competition but MR indicates there are a sufficient number of small business vendors to support a small-business set-aside open-market solicitation. Also, IAW the MR conducted by the SBA’s Puerto Rico and Virgin Island District Offices, there are qualified 8(a) vendors capable of meeting the Consolidated Building O&M requirement; and there is reasonable expectation that offers will be received from two (2) or more 8(a) Small Business concerns.

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CONTRACTING APPROACH SELECTED

The acquisition team determined that one (1) single-award ID/IQ contract (i.e. based on a competitive 8(a) small business development set-aside solicitation) is the best option to provide the required Building O&M services for four (4) of the five (5) buildings within the Caribbean Field Office.

Setting this requirement aside for the 8(a) BD Program complies with SBA’s decision to keep it in the 8(a) BD Program. Also, this consolidation approach will provide substantial operating cost reductions and administrative savings (detailed below) which aligns with the Agency’s O&M Reduction of Cost Program Initiative.

NEGATIVE IMPACT TO SMALL BUSINESS

This acquisition strategy will not have a negative effect on small businesses as the acquisition will be set aside for small business concerns under the 8(a) BD Program. While the number of contracts will be reduced with this consolidation (1 contract and not 4 contracts), this consolidation will continue to provide opportunities to the Small Business community for other vendors not qualified as the prime vendor but that could perform as a sub-vendors in any of the 4 different locations under this procurement. As part of the main required services of this O&M procurement, there are some services such as equipment certifications and testing that must be done by third parties and therefore must be subcontracted by the prime. This will provide and expand small business opportunity dollars.

STEPS TAKEN TO INCLUDE SMALL BUSINESS

This consolidated procurement will be issued as a competitive small business 8(a) BD Program set-aside.

SUBSTANTIAL BENEFITS EXPECTED

The consolidation of the Building O&M services contracts for all the four (4) buildings in the Caribbean portfolio is necessary and justified as outlined in this document. The procurement’s total estimated contract value is below $94M and the substantial benefits will exceed the required 10%.

The acquisition team examined several areas for potential benefits (e.g. cost, quality, acquisition cycle and Terms and Conditions (T&C), etc.) based on historic data. The complete analysis is attached. The consolidation of the Building O&M services at four (4) locations in the Caribbean Field Offices is anticipated to result in substantial benefits as outlined in Table 5 entitled, “Total Substantial Benefits Expected”:

Table 5: Total Substantial Benefits Expected * Substantial Benefits Expected Percent Savings **

Decreased Contract Duplication: Contract Cost Savings 28.2%

Reduced Procurement Administrative Lead Times (PALT) 0.6%

Decreased Contract Duplication: Government 1.2%

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Administrative Savings

Total 30%

The vendor will be able to reduce other direct and indirect costs (e.g. project management at corporate level) as a result of the procurement being consolidated. In particular, the vendor will be able to consolidate their operational costs (i.e. typically represented as an expense (e.g. as overhead or indirect costs) and by a percentage).

Consolidating and awarding the Building O&M procurement to one (1) vendor will significantly reduce the redundant operational costs and Other Direct Costs (ODC) that are charged to the Government by the four (4) separate vendors and/or their subcontractors. The one (1) vendor would have the ability to establish subcontracts (i.e. for specialized services such as equipment testing and certifications); and obtain lower prices, by awarding one (1) subcontract, per specialized service, for all four (4) buildings in the Caribbean portfolio. Having four (4) separate vendors would result in several separate subcontracts for the same service; and higher costs transferred to the Government. These consolidated operational and subcontracts cost will provide the Government significant savings.

Furthermore, the Government will experience administrative savings and/or reduced procurement costs as a result of the issuance of one (1) contract action in lieu of four (4) additional solicitations, corresponding awards (e.g. offer evaluations, negotiations, contract preparation, award issuance and all related documentation) and post award actions (e.g. option reviews, modifications, vendor meetings, etc.) for Building O&M services, at all four (4) buildings, in the Caribbean portfolio.

For example, the Government representative (i.e. for the Building O&M services) currently meets bi-weekly with each contract team within the Caribbean portfolio. Consolidating the Building O&M services, for the Caribbean portfolio, will reduce the administrative and oversight efforts by 390 meeting which is a 75% reduction over a five (5) year period. Refer to Table 6 entitled, “Administrative Cost Savings Example – Bi-Weekly Meetings” for specific calculations:

Table 6: Administrative Cost Savings Example – Bi-Weekly Meetings

Options Bi-Weeks / Year

No. of Contracts

Base Year & Option Years

Total Bi- Weekly

Meetings

Four (4) separate Contracts & Independent Bi-Weekly Meetings 26 4 5 520

One (1) Consolidated Contract & Corresponding Bi-Weekly Meetings 26 1 5 130

Meeting Reduction 390 Meeting Reduction Percentage 75%